Category: Legal Articles

About Tax Disputes

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The Emergence of Tax Disputes

General Explanation of Law No. 14 of 2002 concerning Tax Courts (PP Law) in the first paragraph explains that:

“The implementation of tax collection that is not by the Taxation Law will cause injustice to the taxpayer community so that it can lead to a Tax Dispute between the taxpayer and the authorized official”.

Tax Dispute

Article 1 point 5 of the PP Law provides an official understanding of the Tax Dispute as follows:

“Tax Disputes are disputes arising in the field of taxation between taxpayers or Tax Insurers and the Authorized Officials as a result of the issuance of decisions that can be appealed or prosecuted to the Tax Court based on tax legislation, including lawsuits over the conduct of billing under the Forced Tax Collection Law “.

Appeal or Lawsuit?

  • Appeal
    An appeal is a legal remedy made by a taxpayer or a tax guarantor against a decision that can be appealed based on applicable tax legislation.
  • Lawsuit
    A lawsuit is a legal remedy that can be carried out by a taxpayer or tax guarantor for the implementation of tax collection or for decisions that can be filed for a lawsuit based on the applicable tax legislation.

Settlement Process

  • The objection resolution process is carried out by the tax authorities:
    The central tax is handled by the Directorate General of Taxes
    Customs by the Directorate General of Customs and Excise
    Regional Tax by the relevant Regional Government
  • The process of settling appeals and lawsuits by TAX COURT.

Indonesian e-commerce will need to pay income tax and VAT

Posted by Dr. Guan Yue on with 0 Comment

Prof. Sunaryati Hartono once said: Indonesia must run the law if it wants to advance.

Indonesia ’s Finance Minister Sri Mulyani recently emphasized that Indonesia ’s economic growth does not come from debt, but from investment by foreign private companies. Relying on investment, she is confident that Indonesia’s economic growth rate can reach 7%. In order to attract more foreign investment, the government should formulate facilitation measures in the financial field. One of them is to deregulate investment and promulgate Omnibus Law, such as the implementation of tax reduction and incentive policies, to attract large amounts of foreign investment. So despite the regulation of e-commerce taxation, its purpose is to attract foreign investment and promote economic development.

Among them, Article 14 of the Comprehensive Tax Law clearly stipulates that resolute action will be taken on all traders who participate in commercial activities in the form of e-commerce. In this case, the Ministry of Finance plans to impose income tax and value-added tax on e-commerce operators.

As mentioned in Article 14, paragraph 1, income tax will be levied on the income of tax bodies that conduct e-commerce activities in Indonesia.

The income tax levied on Indonesian e-commerce traders will follow the provisions mentioned in the Income Tax Law. The value-added tax levied on Indonesian domestic e-commerce traders will follow the provisions of the VAT Law on Goods and Services and the Luxury Sales Tax.

According to the “SEA e-Conomy 2019 Report”, Indonesia is expected to achieve a target of $ 82 billion in e-commerce transactions by 2025. On the other hand, Indonesia’s closest competitor is Vietnam. By 2025, Vietnam’s transaction volume is only 23 billion US dollars. From this fact, the efforts of the Indonesian government to pursue e-commerce taxes are largely meaningful because of the huge tax potential. This potential digital tax can also help the government achieve tax goals.

At the same time, this measure can further regulate the Indonesian e-commerce market, thereby better attracting foreign investment.

Introduction of Indonesian Civil Procedure

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In recent years, due to the active economy of Indonesia and the opening of related policies, a large number of foreign companies and individuals have set their sights on Indonesia, the fourth largest Southeast Asian country by population. However, due to insufficient understanding of local laws and regulations, and failure to do homework in advance for local customs, many foreign companies and individuals are caught in legal disputes, and many foreign companies and individuals lack confidence in the Indonesian judicial system. It is still a country full of corruption, and what is more, it still believes that the Indonesian government and the public are biased against foreigners and believes that once caught in the lawsuit, it must be the foreigners who suffer.

The world is constantly developing. There is no one-size-fits-all country in the world. Every government wants to make its own country stronger, its people more prosperous, and its international status more stable, as is Indonesia. As Southeast Asia ’s largest economy, Indonesia has been cracking down on corruption in recent years. In particular, several reforms to the judicial system have greatly improved the efficiency of litigation and reduced the possibility of judges taking bribes. Of course, I am not saying that there is no corruption in the Indonesian judicial system, but that it has been greatly improved compared to the past.

Many foreign reports have advocated that foreign companies and individuals should try to avoid getting caught up in lawsuits when they encounter legal problems in Indonesia. That is because everyone does not know enough about Indonesia’s judicial process. Today, I will mainly talk about the issues that many companies and individuals are more concerned about. What are the steps if a lawsuit is to be filed in Indonesia? How much time does it take?

Regarding helping foreign companies and individuals in lawsuits in Indonesia, especially civil lawsuits, our Queen’s Law Firm can be said to be experienced. Regarding the judicial process in Indonesia, we must first talk about the source of Indonesian law. Indonesia is a Dutch colony and has been colonized by the Netherlands for 100 years, so the legal system is a legacy of the Dutch legal system. And we all know that the Netherlands is the country where several legal thoughts originated in the world. The father of international law, Grotius, is Dutch. Therefore, no matter how many times the law currently used in Indonesia has been modified, the soul of the law still has the shadow of Dutch law. Therefore, the number of courts in Indonesian civil lawsuits is very high, which will surprise many foreign friends.

In Indonesia, whether simple or not, civil cases basically need to be heard about 10 times. Because Indonesian law believes that to ensure the fairness of the parties, it is necessary to ensure a sufficient number of hearings so that both parties have sufficient opportunities to clarify their claims and prove their innocence. If there are no special circumstances, the usual steps are as follows: first, the lawyer submits the indictment in the electronic court system, and then the court will send the subpoena to the other party within two weeks to one month. At the first hearing, the judge and the lawyers on both sides check the power of attorney with each other to ensure the legality of the lawyer. The mediation judge then conducts one or two mediation, and if the mediation fails, it officially enters the hearing stage, that is, the second hearing, and the judge reads the indictment. The third time a response to our indictment was submitted by the opposing lawyer. The fourth time we responded. The 5th time the other party will reply. The sixth time we submitted evidence, the opposing lawyer reviewed the evidence. The 7th time our witnesses attended. The 8th time the other party submitted evidence, our lawyers reviewed it. The 9th counterpart witness attended. For the 10th time, both parties submitted their concluding remarks. For the eleventh time, the judge read the verdict.

Each week or the same day at most one week apart, mediation is not counted, and 11 sessions are held. In other words, civil proceedings in Indonesia will last at least 3 months and up to 6 months.

In addition, Indonesia has a three-trial final system, which means that there are two opportunities to appeal, and each appeal lasts for one to three months. This is done with full consideration of the principle of fairness.

So many people will ask if it will be troublesome to go to court without stopping. In fact, with the exception of the divorce case, other civil lawsuits do not require the parties to be present, just leave it to a lawyer to do it. And now Indonesia is launching an online court trial system, which means that all court proceedings will be conducted directly through the Internet, which will greatly improve efficiency. The system is expected to be operational in 2020.

We have always advocated that when we encounter legal problems, we must solve them through legal channels. Blind retreat and tolerance will only promote the arrogance of the other party. Respect and dignity need to be won by ourselves.

Signing a Contract in Indonesia must have an Indonesian Version

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Recently, Queen Law Firm received several debt disputes between foreign companies and Indonesian companies. Foreign companies provided products or services to Indonesian companies, but Indonesian companies did not perform contracts to make payments. Among them, the case of several foreign companies could not be recovered through legal channels, because at the time of signing the contract, there was no contract in the Indonesian version, only the English version of the contract.

Indonesian law stipulates that a contract must be signed in Indonesia and Indonesian stamp duty must be used in order to have a legal effect. This is a necessary measure for a country to maintain its sovereignty and international image. However, many foreign companies do not know enough about Indonesia’s national conditions. They do not know that Indonesia’s official language is not English, but Indonesian language. They do not pay enough attention to legal matters. This has been exploited by many Indonesian companies to legally collect debts. Hidden hidden dangers.

The picture below is a stamp duty commonly used in Indonesian contracts. All contracts must be stamped and then signed to be legally binding.

This matter has already attracted the attention of many governments. The Japanese government has specially trained in this area for Japanese companies that will conduct commercial activities in Indonesia. The governments of other countries have not attracted enough attention, and we are also very distressed to see that many foreign companies have suffered losses.

So, is there a solution to this situation? Our answer is, yes. But the risks are higher, the costs are higher, and it takes longer time.

Therefore, if a foreign company wants to conduct business activities in Indonesia, it is best to hire a professional lawyer to carry out relevant legal services, such as contract drafting, document review, qualification review, and commercial negotiation. Things about the law must not be taken lightly, otherwise there will be endless troubles.

 

Indonesian Supreme Court Promotes E-court System

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In order to realize the principle of Simple, Fast and Low Cost in the judiciary, the Indonesian government issued a new policy namely the Supreme Court Regulation Number 3 of 2018 concerning the implementation of e-court.

In the framework of this implementation, the Indonesian Supreme Court cooperated with Advocate Organizations to disseminate information about the e-court, such socialization was carried out throughout Indonesia.

The E-court is very helpful for Advocates in carrying out their duties, making advocate work simpler and faster, with the e-court advocates have been able to register cases at the office without having to go to court, and payment of down-payment cases is easier because it can be done via transfer because the e-court itself has collaborated with several banks throughout Indonesia.

By Eni Oktaviani, SH

Use of Foreign Workers in Indonesia

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In the Act No. 20 of 2018 concerning the Use of Foreign Workers, foreign workers users are required to provide workshops with certain positions and within a specified period of time, and must prioritize the use of Indonesian workers in all available positions. But if there is no personnel Indonesian employment that is incapable in the position, is then employed by foreign workers.

Foreign workers are also prohibited from occupying positions that take care of certain personnel and / or positions determined by the minister.

Every foreign workers users  must have a Planning for the Use of Foreign Workers (RPTKA) issued by the Minister of Religion and a designated official, which contains:
1. Reasons for using Foreign Workers;
2. Position of Foreign Workers in the organizational structure of the company concerned;
3. The period of use of Foreign Workers;
4. Appointment of Indonesian workers as a companion for Foreign Workers employed.

Requests for ratification of Planning for the Use of Foreign Workers submitted by foreign workers users must attach:
1. Business license from the authorized agency;
2. Letter of establishment of the company issued by the Ministry of Law and Human Rights;
3. Chart of the organizational structure of the company;
4. A statement letter to show the accompanying workforce and the implementation of work education and training; and
5. Statement letter to implement education and job training for Indonesian workers in accordance with the qualifications of positions occupied by foreign workers.

Planning for the Use of Foreign Workers Approval is given by the minister or appointed official no later than 2 days after the application is received in full.

By Eni Oktaviani

“Chinese E-Commerce Law” Officially Applied

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On January 1, 2019, the “E-Commerce Law of the People’s Republic of China” (hereinafter referred to as the “E-Commerce Law”) was officially implemented. Micro Business, Procurement Service and other formalities were included in the supervision, all E-Commerce activities must be registered, and pay taxes in accordance with the law. This shows that the era of savage growth of E-Commerce has passed, and the norm will be the key word for E-Commerce in the future.

Since this year, micro traders, procurement services, etc. Has been given a new identity – “E-Commerce Operator”. Many of them sell goods through a network of acquaintances, high consumer confidence and stickiness. According to Zhiyan Consulting data, from 2014 to 2017, the number of social media merchant businesses in China increased from 7.52 million to 20.18 million. By 2019, the size of the social media business market is expected to reach 1 trillion yuan. These include “social E-Commerce” which has grown wild in recent years and has formed a counterweight to traditional E-Commerce.

Three Keywords “E-Commerce Law”

It is undeniable that E-Commerce currently has various types of chaos such as fake items, fake praise comments, leaked personal information, and responsibilities that ignore sales after sales. The application of “E-Commerce Law” has resulted in a strong increase in strength on both the traditional E-Commerce platform and the new social E-Commerce platform.

  1. Payment of Taxes

For a long time, the phenomenon of tax evasion in the field of E-Commerce has become serious. Article 11 of the E-Commerce Law stipulates that E-Commerce operators must carry out their tax payment obligations in accordance with the law and enjoy tax benefits in accordance with the law. The main payment body must include the operator on the E-Commerce platform. This means that all trading methods through E-Commerce channels require tax.

2. Business Permit

Article 10 of the E-Commerce Law stipulates that E-Commerce operators must handle the registration of market entities in accordance with the law. In particular, overseas online deposit services must have business licenses from China and the other country. Article 29 stipulates that it is necessary to take steps to deal with products that are not licensed or prohibited and report to the authorities.

3. Platform Responsibility

In actual E-Commerce business activities, regarding the commercial status of parties involved in transactions, platform operators> e-commerce operators> consumers. Article 38 of the E-Commerce Law stipulates that joint responsibility is borne or known to know business violations without taking the necessary actions. Article 83 stipulates that if the E-Commerce platform operator violates the provisions of Article 38 of the law, or fails to qualify for an operator audit on the platform, the supervision department and market management will order the time limit to be corrected, and the situation will be ordered to stop repair. Fines not less than 500,000 yuan but not more than 2 million yuan will be charged.

Although the implementation and difficulties of the actual implementation of the E-Commerce Act are unknown, it is now clear that in the future, E-Commerce operators will be subject to strict supervision and the industry will be overhauled.

Will being a small company be a solution for micro traders?

Procurement services that originally came from international students or people who worked abroad, when they returned to their home countries, brought some cosmetics, bags, etc. to relatives and friends. With the increasing demand for foreign consumption, private entrusting services are getting bigger because of the unique price advantage. Overseas tour guides, flight attendants, and ordinary tourists have joined the ranks. They buy goods at low prices abroad, and then sell them after returning home to make a profit.

Chinese Commerce Minister Zhong Shan said at this year’s meeting that according to preliminary estimates, the Chinese population spends around 200 billion US dollars shopping overseas a year, and its shopping list includes luxury goods and daily consumption goods.

After the adoption of the “E-Commerce Law”, the Deposit Service has two choices: the first to keep the original business unchanged, to register and pay taxes in accordance with the law; the second is leaving the original service business and changing other ways to create cash flow.

In this case, a friend who carried out the procurement service said to Queen Law Firm: “Initially we were able to profit from different prices. If you have to pay taxes, the price of goods will be increased, and nobody wants to buy it anymore.” Obviously, the increase in tax costs makes it lose its price advantage in market competition. The first method does not work for small personal purchasing businesses. In this way, it is more likely to switch to the second.

At the same time, the social E-commerce platform must carry out identity platforms, fight counterfeit goods, ensure authenticity, and improve quality. The information above is the core of the social E-commerce platform competition.

The introduction of the “E-Commerce Law” aims to standardize the fast-growing and mature E-Commerce industry and create a more equitable and reasonable competitive environment. Of course, under the cold winter of capital, the adoption of the E-Commerce Law will accelerate market changes and will also bring some new opportunities.

by Derrick Guan

Prenuptial Agreement on Indonesia

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Prenuptial Agreement namely agreement made by prospective husband and wife about their marriages, the contents of which depend on the agreement between the two parties provided that it does not conflict with the Law.

According to Indonesian civil law expert Wirjono Prodjodikoro, the word Prenuptial Agreement is defined as a legal relationship regarding property of wealth between two parties, in which one party promises or is considered promising to do something, while the other party has the right to demand the implementation of the agreement. The goal is to protect the assets of each bride and groom where the parties can determine their respective assets.

In general, Prenuptial Agreements are made to separate the assets and debts that are owned by both parties, but in the development of Prenuptial Agreements not only made for the separation of assets, many couples enter questions of interest in the Marriage Agreement. For example, still allowed to pursue his or her hobbies or collect luxury items. Couples can balance each other and remind the family financial stability not to be disturbed.

In principle, the parties determine the contents of the marriage agreement freely to make a deviation from the Indonesian Civil Code’s rules on the union of assets but with the following restrictions:

  1. The agreement may not conflict with decency and legal issues concerning the authentic deeds of public order (Article 139 of the Indonesian Civil Code).
  2. In the Agreement no promises made are deviated from:
    a. Rights arising from the authority of the husband: for example to determine the place of residence or the right of the husband to take care of the union of marital assets;
    b. Rights that arise from the power of parents: for example the right to take care of children’s wealth or children’s education;
    c. Law-determined rights for husband and wife who live the longest: for example being a guardian or appointing a guardian (Article 140 of the Indonesian Civil Code).
  3. There is no promise that contains the release of rights to the inheritance of the people who lowered it (Article 141 of the Indonesian Civil Code).
  4. They should not promise that one party must pay a portion of the debt which is greater than the portion in the union profit (Article 142 of the Indonesian Civil Code).
  5. No promises can be made that their marriage will be governed by foreign law (Article 143 of the Indonesian Civil Code).

 

Advocates Are Ensured That They Cannot Meet If They Do Not Register at E-Court

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The application of case administration in electronic courts (e-court) has a direct impact on the practice of advocates in Indonesia. Advocates who do not have an e-court account will be hindered by proceedings in a number of courts. But the Supreme Court guarantees a fast, easy and practical account registration process for advocates in e-court socialization, Friday (7/20), at the Pullman Hotel, Jakarta.

Director General of the General Judiciary Agency Herri Swantoro, Director General of the Religious Courts Agency Aco Nur, and Director General of the Military Court and State Administration Agency Maj. Gen. Mulyono explained directly to advocates at the socialization event in collaboration with the Indonesian Advocates Association (Peradi) “Indonesian Advocate Voice”.

Supreme Court Regulation No.3 Year 2018 concerning Administrative Cases in the Electronic Court promulgated since April 4, 2018 then covers the administration of civil, civil, religious, military and business administration matters.
Based on the Perma E-Court, proof of membership in an advocate organization and evidence of an official oath by the high court is a key condition for registration.

Article 4
…
(3) The requirements for being a registered user for advocates are:
a. ID card
b. Advocate membership card; and
c. Minutes of swearing in by the high court

Article 6
…
(2) The Supreme Court has the right to refuse registration of registered users who cannot be verified.

Although not all courts have implemented e-court, Director General Badilum Herri Swantoro told hukumonline that the Supreme Court is targeting all district courts, religious courts and state administration courts to be ready to use the e-court system in September 2018.

“The Chief of the Supreme Court is targeting September to be all ready,” Herri said after socialization.

Herri explained that being registered in the e-court system is an absolute requirement for advocates to represent their clients as legal counsel in the trial. “If you don’t register, you can’t enter the system, verify it in the High Court,” he said.

According to Herri, advocates who have been appointed before the Advocate Law must still have a letter of appointment through the Department of Justice at the time. Although it is not in the form of an Oath Minutes, the document still has an administrative number. “If there is a file that is definitely verified by the High Court, if it does not exist, it will be traced,” Herri explained.

Juniver Girsang, Chairperson of Peradi “Voice of Indonesian Advocates” welcomed the e-court system for the future of the advocate profession in Indonesia. “This is good. There are no more illegal advocates, “he said at the event.

According to Juniver, this regulation disciplines lawyers to actually have an oath report and join advocate organizations. “The requirement to have an account is the news of the oath and the sign card of the advocate, beyond that it cannot. Must enter the organization. Can not convene if it is not registered, “he told hukumonline.

Harry Ponto, Peradi Deputy Chairperson “The Voice of Indonesian Advocates” said the same thing. Harry sees that the e-court system will also contribute to improving the quality of the advocate profession. “This is part of policing and hopefully our starting point is solid,” he said when interviewed by hukumonline.

He said that the e-court system had been implemented in Singapore since a dozen years ago. With the fact that e-court is not new in the global world, Harry hopes that advocates support the advancement of this technology to improve the quality of law enforcement. Including the improvement of the quality of the advocate profession.

“For those who have been messing around with the fake oaths, stop, if there is a fake it means criminal, will be pursued again,” he said.

When asked about the complaints of a number of Peradi members who did not have the swearing-in minutes because they were appointed as advocates with the “whitening” of the Advocate Law, he invited immediately to contact Peradi to take care of the swearing. “Let’s report, we facilitate the swearing. Just last year like Mr. Fred, Who doesn’t know? Founder Peradi too. Last year (new) was sworn, “he said.

According to Harry, senior Peradi members who did not yet have an oath report were mostly from legal consultants before the Advocate Law was passed. “They have actually been verified by Peradi in 2004, we have already offered them, there have been quite a number of people sworn in,” he said, who is also a member of the Capital Market Legal Consultants Association (HKHPM). He mentioned that there were not many people who did not have an oath, about 150 people.

Since it was officially launched on July 13, 2018 and then in Balikpapan, the Supreme Court has announced that there are 31 District Courts, 9 Religious Courts, and 6 State Administrative Courts that have used e-court. To be registered as an e-court account owner so that they can convene in these courts, advocates must fill in the following data on the page http://ecourt.mahkamahagung.go.id.